Pharmaceutical Giant Pfizer Faces Activist Investor’s Call for Turnaround
A prominent activist investor, Starboard Value, has acquired a significant stake in Pfizer, valued at approximately $1 billion, with the goal of implementing a major overhaul at the struggling pharmaceutical company. According to insiders, Starboard has approached former Pfizer executives Ian Read and Frank D’Amelio to support its efforts, and both have expressed interest in collaborating.
Starboard’s primary concern is Pfizer’s departure from its traditional cost-conscious approach and investment in innovative drugs under the current leadership of CEO Albert Bourla. The company’s revenue and free cash flow surged during the COVID-19 pandemic, driven by its expedited vaccine development. However, its stock has underperformed, trading at a 30% discount compared to 2019 levels.
Pfizer’s acquisition strategy, which has totaled nearly $70 billion since 2020, has raised eyebrows among analysts. One notable example is the company’s purchase of Global Blood Therapeutics, which has yielded questionable returns. The acquisition included a drug for sickle cell disease, Oxbryta, which generated only $300 million in revenue last year.
Ian Read, who led Pfizer from 2010 to 2019, successfully implemented a cost-focused culture that drove the company’s shares to more than double during his tenure. However, Pfizer has since strayed from this approach, leading to a significant decline in shareholder value.
Despite implementing cost-cutting measures, including a $4 billion program, Pfizer’s stock continues to struggle. Starboard Value, led by Jeff Smith, has a history of targeting companies in the technology sector, but its focus on Pfizer marks a departure from this trend. The activist investor has previously challenged News Corp’s dual-class share structure and has launched campaigns at Autodesk, Salesforce, and Match Group.
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